Administrative Law Judge: Coal-Fired Plant in Oklahoma Could Save Billions for Ratepayers

By Francis-Smith, Janice | THE JOURNAL RECORD, August 3, 2007 | Go to article overview
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Administrative Law Judge: Coal-Fired Plant in Oklahoma Could Save Billions for Ratepayers


Francis-Smith, Janice, THE JOURNAL RECORD


The $1.8 billion Red Rock coal-fired plant could pay for itself in about seven years and save ratepayers more than $1 billion over the 40-year life span of the plant, Administrative Law Judge Maribeth Snapp estimated in a report she issued to the three-member Oklahoma Corporation Commission.

Though the environmental impact of a coal-fired power plant is a concern, Snapp found that the benefits of the plant would counterbalance the risks.

The coal-fired plant would cost more to build than the natural gas option, but gas would cost more to fuel the plant than would coal. Snapp estimated that at $7 per thousand cubic feet of natural gas, the fuel savings would equal the higher construction cost quickly.

Snapp presented figures to compare the cost of generating 600 megawatts of electricity from the Redbud gas-fired plant in Luther against generating 600 megawatts using the proposed Red Rock coal- fired plant. Snapp used operating information from coal plants similar in design to the one proposed for Red Rock, though supporters of the Red Rock plant say the facility would be constructed using new technology that would make it even more efficient.

"The ALJ finds that the annual fuel savings for the Red Rock coal plant will make up for the higher capital cost of the Red Rock plant in 4.18 years," reads Snapp's report. "This 4.18 years to break even is around 10 percent of the expected 40-year life of the Red Rock coal plant.... Using these capital and fuel costs over a 40-year life, the nominal savings from the ratepayers would be about $5.5 billion while the cumulative present value or real dollars would be about $1.2 billion."

The Red Rock plant is estimated to cost $1.8 billion to build.

"The break-even point to justify building the plant just for the fuel savings would be the capital cost divided by the fuel savings which equals seven years to break even," Snapp reported.

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Administrative Law Judge: Coal-Fired Plant in Oklahoma Could Save Billions for Ratepayers
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